Obama Tax Break Could Cost Millions Next Tax Day
As in Millions of Taxpayers Who Will Have to Give Money Back
Were you one of those people who were elated to hear about the “Making Work Pay” tax break that President Obama gifted to the American people? Truly, it did benefit many people. Workers were paid back to the tune of 6.2 percent of their earned income, with a max of $400 for individuals and $800 for married couples filing jointly. Those singles making more than $95,000 and couples making more than $190,000 weren’t eligible, but then they didn’t have to be.
With that refund, those eligible didn’t have to resort to short term loan options like payday loans. However, for millions more, perhaps they’ll be wishing they had gotten a payday loan instead of having to pay back hundreds of dollars. And don’t even get me started on the farce that is tax refund loans (aka refund anticipation loans).
15-Million-Plus Owe Uncle Barack $250 Apiece
And that’s just the retirees!
That’s what the Associated Press is reporting as consumers are attempting to dig their way out of the blight of the recession. People are looking forward to some debt relief without the pain of tax refund loans, and in this instance, perhaps even without payday loans. But according to the IRS, many of people are going to be disappointed. What goes around comes around … and bites you in the hindquarters.
Who Will Owe Money Because of Making Work Pay?
We’re talking those with more than one job and married couples where both parties work (that’s a big one). These groups will have to repay $400, which could mean a smaller refund or even a tax bill. Even those in their golden years with rusty old Social Security and taxable wages will not have the lamb’s blood painted on their door. Their Obama giveback will be $250. Pony up, America!
Ah, the Memories of Magic Refunds and High Hopes
Individuals felt up to $400 worth of love for Making Work Pay, while couples doubled their pleasure up to $800. It was all part of the revolutionary stimulus package back in February of 2009. It pumped paychecks full of chicken broth, which most consumers promptly spent. If you spent it and you aren’t sure if you’re having enough withheld from your paycheck, click here for a handy calculator. If you don’t like what you find, file a new W-4… fast, because the 2009 tax year is almost over! The IRS has known about this problem since last spring, and they’ve been urging people to check their withholding amount since then.
Picking Up the Pieces of a Shattered Stimulus Plan
Payday loans may be short-term glue for what ails your budget, but this whole stimulus thing replaced pro-mise with pro-blems. For instance, a single worker with two jobs could get a $400 Obama-boost for each job, even though he’s only eligible for one $400 buff. That will have to be paid back. Similarly, with married couples where both work, if they combine to earn over $13,000, they enter a new tax bracket. There’s a total $1,200 boost instead of the $800 that should have been allowed. That’s $400 to pay back, friends. The Census Bureau says that 55 percent of all married couples in America are in this boat. That’s 33 million couples with 400 reasons to love Making Work Pay.
Wait, Don’t Forget Victimized Students
If they’re single and work part-time, they were eligible for the $400 credit. But, all my payday loans and garters, if their parents claimed them as a dependent, they didn’t qualify! In this case, Making Work Pay means paying back that $400.
Retirees Making Work Pay for Obama
More than 50 million Social Security recipients got $250 lump sum payments each, all thanks to Making Work Pay. But they were already receiving the credit for being employed, so the $250 refund will have to be paid back. It keeps getting better for American citizens.
Don’t Make the Same Mistakes in 2010
The Making Work Pay credit is still available, so tread cautiously. You certainly don’t want to create the same problem for yourself again. The average refund was about $2,800, so this Making Work Pay giveback will not result in a bill for many. However, some won’t be quite so lucky.
Iowa Sen. Chuck “Seppuku” Grassley of Iowa took a break from his more breathless moments to nail Making Work Pay on the head. It was “another unfortunate example of what can happen when Congress and the White House rush through legislation like the stimulus without thinking through the consequences,” he told the AP.
(Insert forehead slap and “I shoulda had a payday loan!” here)